Senate Panel Backs Geithner's Nomination for Treasury Secretary

After grilling Timothy Geithner throughout the day on Wednesday, the U.S. Senate Finance Committee voted 18-5 in favour of his nomination to become Secretary of the Treasury. His full confirmation from the Senate is expected next week.

Geithner, 47, will become Secretary 13 months into the U.S.-led recession that has spread fears and sparked failures across the globe.

In his testimony, Geithner told the Senate Finance Committee that the basic lesson of financial crises is the "failure to appreciate the magnitude of the problem," suggesting the government had to take immediate action to let credit flow freely again.

Geithner strongly supports free markets but in the current climate, he said government can take risks that the private sector can't.

An economic stimulus plan from the new administration is supposed to be released within weeks, and Geithner has said it will "ensure" more consumption than the package put together by his predecessor last year.

In addition to his live testimony on Wednesday, Geithner also submitted more than 100 pages of answers to written questions posed by the committee after the hearing.

That testimony made headlines early Thursday when it was revealed that the Obama administration plans to take a tougher stance on trade issues with China.

"President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency," Geithner said. "The new economic team will forge an integrated strategy on how best to achieve currency realignment in the current economic environment."

What impact those comments will have on Beijing is so far unclear, but they had no effect on the panel's decision to endorse Geithner's confirmation.

The five Senators voting against Geithner were all Republicans. The reasons were not based on Geithner's experience or his politics, but the fact he failed to pay Social Security and Medicare taxes from 2001 to 2004 when he worked for the International Monetary Fund.

"I'm really disappointed that we're even voting on this," said Michael Enzi of Wyoming, who added that the Senate has rejected previous candidates for smaller infractions.

Geithner repeatedly admitted that his mistakes were careless and avoidable, but the majority of Senators were convinced of Geithner's claim that the errors were "completely unintentional."

By Patrick McGee and edited by Stephen Huebl
©CEP News Ltd. 2009